Old cars are not investments

Kicking old Habits

With luck comes sacrifice. People look at what you have and judge you before you even open you mouth. One of our old friends used to always ask us how can you afford what ever it was we had – “you are so lucky”. The one word was sacrifice. We choose what we want in life and adjust our thought process to reach that goal. In this persons case I suggested giving up smoking as a way of saving money to buy his family a better quality of life both financially and for his own health. I used to smoke and the money wasted… Well I don’t like to think; it’s all about choices.  

I worked with this guy called Trent (not real name)and tried to explain downsizing to him on simple terms.

You see for Trent, who represents most guys his age it’s about Cigarettes and his choice of car. Trent has an old Holden Commodore. It’s an Australian built car that is really only worth money to an Aussie who likes this type of car. Trent’s has this car for the last 15 years and has spent thousands on it. With its 6ltr V8 engine and recently installed $800 carburettor even I get pangs of nostalgia about modifying old cars.

VH Commodore

Trent lives week to week with his wages. As an assistant manager he was on more money that I was yet he never seemed to have money to spare. His son was only 4 years old and with a wife who smoked as much as Trent did their money was stretched from week to week.

I sat with Trent one day, he asked me “how many houses do you own?”

“Four” I answered back

“You must be loaded or lucky, how did you manage to get the money scraped up to buy that many?”

I didn’t want to sound patronizing but I sat with Trent for the next  1/2 hour explaining what I want to share with you.

You see Trent spends over $20 for a pack of cigarettes and between him and his wife if 15 years they have always smoked this heavily, they puff away $100 per week.
I nudged Trent and said 

“Mate, that’s $78000 you have wasted over the last 15 years, there’s your deposit on a couple on rental houses”
If Trent and his wife continued to smoke until they retired in another 25 years he would waist another $130000.

“The sad thing here is not the money wasted” I said to Trent

“The sad thing is at the rate you and your wife smoke you wont be around long enough to retire and with the little one so young that cuts me up as a father!”

Trent agreed and kept shrugging me off

We have talked many times about his car and it probably doesn’t help when I tell him

“Mate if I had your car I’d put leather interior…..etc” 

But guys this is a message to ALL of us,

CARS ARE A DEPRECIATING ASSET.

I explained that the reason I sold my car of only 18 months old was that I had come to a recent conclusion, I wanted to be more free with my money and in selling my car and buying a cheaper car I saved $20000 in loan repayments. 

I challenged Trent and asked him how long it would take to pay off a loan of that size?
We both agreed on about 5 years.
That’s 5 long years of work just to pay off something that is rapidly going down in value while the costs to run it (thanks to the oil companies) is rapidly rising.
So I say it again….CARS ARE A DEPRECIATING ASSET.

Trent’s V8 has not seen a full tank of petrol in over 5 years as Trent never has enough money to fill the tank completely. He uses this car to drive the 40km round trip to work each day.

His little boy loves this car and Trent says one day it will be his, but given the cost of fuel I wouldn’t want to hand something to my kids that would be a burden to them financially.
I said to Trent to buy a smaller car just to run to work and save the money on fuel, but after working with Trent for a couple of years I know sadly none of this will change without some light bulb moment or catastrophe when he finally understands the choices he has made.

Trent’s just a typical guy, sadly there are thousands of typical guys out there. I know I was once one of them.

4 thoughts on “Old cars are not investments

  1. Our older car (16 yrs) is NOT an investment, its the only way we can afford a decent vehicle. It is used but road worthy, the only payments we have to make is to repair/replace parts to keep it road worthy. We recently had an accident where the other person hit the front. The only major repair we will make will be the running lights and the suspension the cosmetic parts we will just live with. Currently we own 2 cars, same make, same model, same year. This makes most of the parts interchangeable, one has about 100,000 miles on it, the other is at 200,000. we are hoping to get to 300K on both.
    Paul is blind and retired. We are both in our 60s, trying to figure out how to spend our ‘Golden Years’ ??? we live in the middle of the USA, Indiana. love your pictures and the article for living off grid.

  2. Welcome to the understanding side of the tracks. See my family doing the same stupid things. They wonder how I own what I own, I wonder why they keep buying vehicles that are worth less than 30% of what they are paying for it within the first year, two at most.

    One thing I learnt… you can tell them and tell them, explain how things work, tell them about the sacrifices that get you to where you are… but they will never listen.

    They always say things come so easy to you. Yet they do not make the same sacrifices that you make, to have things of value. Same ol’ same ol’.

    Enjoy what you have, give more, expect less – I think this is the best recipe for happiness, and I’m working on it now.

    Take care

    Michael

    1. Hi Michael, thanks for the comment – yup it’s sometimes a hard lesson to step away and let others fall unto the pit that we were once in… It’s almost “the ambulance at the bottom of the cliff scenario.” – Hope you enjoy our posts. Wayne

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